Page 64 - Forbes - USA (March 2020)

→ Near the foot of San Francisco’s California

Street stand the august stone pillars of a

bank dating to the 19th century.
62

A few paces away sit the offices of Coinbase, the
T
S largest American exchange for cryptocurren-
I
L
cies like bitcoin. It’s a beehive of software engi-
E
H neers and young marketing executives. There,
T
the worlds of by-the-books banking and crypto-
•
anarchism collide.
E
D In style and philosophy, Brian Armstrong,
I
U the 37-year-old billionaire cofounder and CEO
G
of Coinbase, is in the camp of the financial an-
T
N archists. He sits, jammed alongside lieutenants,
E
M in a row of tiny desks resembling library carrels.
T He wears a black T-shirt, black pants and shiny
S
E white sneakers. He talks about a brave new world
V
N in which we are liberated from the shackles of
I
giant banks and government-controlled mon-
ey supplies. During an expansive interview, this
usually reserved and press-shy entrepreneur de-
clares why he got into this business: “I wanted
the world to have a global, open financial system
that drove innovation and freedom.”
In following a business model, though, Arm-
strong fits in with the pinstriped financiers work-
ing down the block. Eight years after its start, his
firm has opened 35 million accounts, presides
over $21 billion of assets and is on target, we es-
timate, to top $800 million in revenue this year.
That success comes from acting like a bank.
Coinbase draws in customer funds via bank

Change Agents wires. It stores its assets—numerical keys
Chief operating that unlock coins—in vaults. It boasts of
officer Emilie Choi
(left) and chief insurance coverage from Lloyd’s of Lon-
financial officer don. It has a security staff of 41, including
Alesia Haas
at Coinbase in an Iraq War veteran assessing perimeter
San Francisco’s risks and a Ph.D. cryptographer doing the
Financial District
same for mathematical assaults.
The selling proposition here is securi-
ty—security conspicuously lacking at some of the exchang-
es with which Coinbase has competed. The Mt. Gox ex-
change in Japan went bust in 2014 after hackers spirited
away coins worth $480 million. Customers of QuadrigaCX,
which was one of Canada’s largest exchanges, have been
unable to retrieve $150 million in crypto since the founder PHOTOGRAPHS BY ETHAN PINES FOR FORBES
supposedly died suddenly in December 2018, holding the
only set of keys to unlock their money. They now want the
body exhumed.
In order to capture a gilt edge, though, Armstrong has
had to veer away from the antiestablishment ethos that got

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